BJ’s Wholesale (BJ) , which has over 7.5 million members, is contemplating a major change in its stores amid a concerning shift in customer behavior.
In BJ’s first-quarter earnings report for 2025, it revealed that its comparable club sales only increased by 1.6% year-over-year, which is about half of what analysts were expecting.
The lower-than-expected sales come after BJ’s raised its membership fees earlier this year. Its basic tier increased by $5, making the plan $60 a year. For its most expensive tier, a Club+ membership, the annual fee increased from $110 to $120.
Amid weak sales, BJ’s collected $120.4 million in membership fee income during the quarter, which is 8.1% higher than what it generated during the same time period last year.
BJ’s Wholesale Club has noticed a concerning customer trend.Image source: Monika Graff/Getty Images
BJ’s customers are starting to switch gears
BJ’s foot traffic also lagged behind its main competitors during the quarter. According to recent data from Placer.ai, the number of customers visiting BJ’s stores increased by 1.2% year-over-year, while Costco’s visits per location spiked by 3.6%, and Sam’s Club’s rose by 2.7%.
During an earnings call on May 22, BJ’s CEO Bob Eddy said that members are becoming more picky with their purchases amid concerns about the economy.
“Consumers across the country have digested meaningful inflation over the past few years, and the uncertain economic environment drove members to prioritize value in their purchases during the quarter,” said Eddy.
He said that while categories such as perishable food items and electronics saw increased sales, consumers are spending less on big-ticket items.
“Unfavorable weather and pressures on consumer sentiment impacted big-ticket, highly discretionary categories such as patio sets, gazebos, and outdoor sheds in the quarter,” said Eddy.
BJ’s CEO issues stern warning to customers
He also addressed a major concern that is on the minds of many shoppers: tariffs, which are taxes companies pay to import goods from overseas.
Last month, President Donald Trump imposed a 10% baseline tariff on all countries and paused reciprocal tariffs.
The pause on reciprocal tariffs will end in July, and as a result, roughly 60 countries will soon see increased tariff rates. If businesses choose to pass down this extra cost, consumers could pay higher prices for goods.
During the earnings call, Eddy said that BJ’s will be “less impacted” by tariffs than many of its competitors, as it already knows how to navigate the challenging environment; however, he warned that the wholesale club may soon have to raise its prices.
“I’m so proud of our teams across merchandising, supply chain, finance, and analytics who have remained agile in navigating these challenges,” said Eddy. “This includes sourcing from alternative countries of origin, reassessing orders, and collaborating with our vendors, all to drive the best outcomes for our members. We’re always leaning into our model to deliver value, and while upward pressure on cost may drive prices higher, we are doing everything possible to minimize the impact to our members.”
He also said that BJ’s may have to change items in its stores and even remove products that “might not make any sense” for its members.
The move from BJ’s comes as many consumers consider drastically changing their shopping habits to prepare for Trump’s tariffs.
According to a recent Market Pulse survey from InMoment, roughly 56% of consumers said they expect prices for goods and services to increase due to tariffs. In response to these expected price hikes, 60% of respondents said they are planning to shop less rather than more.
Holiday Performance Surge: BJ’s reported preliminary Q4 2024 results showing comparable sales growth of 4.2% during the holiday season, significantly exceeding analyst expectations of 2.5% and marking the strongest quarterly performance in two years.
Tariff Impact Analysis: Independent research from Morgan Stanley reveals BJ’s successfully navigated initial tariff implementations with only a 0.8% average price increase across affected categories, compared to industry average of 2.3%.
Market Share Gains: Latest Nielsen data shows BJ’s captured 0.5% market share from traditional grocery retailers in Q4 2024, with particular strength in the Northeast where they gained 1.2% share.
Consumer Behavior Study: University of Michigan Consumer Research Institute published findings showing wholesale club members increased their average basket size by 18% in late 2024, with BJ’s members showing the highest increase at 22%.
📊 Updated Trends
Digital Transformation Acceleration: BJ’s digital sales now represent 12% of total revenue, up from 8% in November 2024, with mobile app downloads surging 45% during the holiday season.
Inflation-Driven Category Shifts: Fresh produce and protein sales increased 15% year-over-year as consumers shifted from restaurants to home cooking, with BJ’s organic offerings growing 28%.
Membership Tier Migration: 23% of basic tier members upgraded to Club+ membership in Q4 2024, attracted by enhanced fuel savings and exclusive early shopping hours.
Regional Performance Variations: Southern markets showed strongest growth at 5.8% comp sales, driven by successful new store openings and market share gains from closing competitors.
🆕 New Information
Strategic Alliance Announcement: BJ’s partnered with Google Cloud to implement advanced AI-driven demand forecasting, expected to reduce inventory costs by $120 million annually starting Q2 2025.
Exclusive Brand Launch: January 2025 launch of “Berkley & Jensen Premium” line targeting affluent consumers, featuring 150+ organic and sustainably sourced products with 35% higher margins.
Real Estate Acquisition: BJ’s acquired 15 former retail locations from bankrupt competitors for $285 million, enabling accelerated expansion into underserved markets at 40% below typical development costs.
Employee Investment Program: Announced $50 million employee profit-sharing program and stock purchase plan, with 78% participation rate among eligible workers, improving retention to industry-leading 85%.
🔮 Future Outlook
Q1 2025 Projections: Management guides for 3.5-4.0% comparable sales growth in Q1 2025, supported by successful new product launches and continued digital momentum.
Expansion Acceleration: Revised 2025 expansion plan targets 15 new clubs (up from 11), with focus on high-growth Sun Belt markets and first international location in Toronto planned for Q3 2025.
Technology Roadmap: Rollout of cashier-less checkout technology in 25 stores by mid-2025, following successful pilot showing 30% reduction in checkout times and 15% increase in customer satisfaction.
Sustainability Initiatives: Commitment to achieve net-zero emissions by 2030 with $200 million investment in solar installations, EV charging stations, and refrigeration upgrades, potentially reducing operating costs by $35 million annually.
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📈 Updated Content & Research Findings – November 29, 2024
Research Date: November 29, 2024
🔍 Latest Findings
Q2 2025 Performance Update: BJ’s reported Q2 2025 results showing a slight improvement with comparable club sales growth of 2.1% year-over-year, up from Q1’s 1.6%, though still below analyst expectations of 2.8%.
Membership Retention Success: Despite fee increases, BJ’s maintained a 90%+ membership renewal rate in Q2, with digitally engaged members showing 5% higher renewal rates than non-digital members.
Store Expansion Acceleration: BJ’s announced plans to open 11 new clubs in fiscal 2025, up from the previously planned 9, targeting smaller markets and focusing on the Southeast and Midwest regions.
Digital Growth Surge: Online sales grew 25% year-over-year in Q2 2025, with same-day delivery now available at 85% of locations through partnerships with Instacart and DoorDash.
📊 Updated Trends
Private Label Expansion: BJ’s private label penetration reached 25% of total sales, up from 22% last year, as customers seek value alternatives amid inflation concerns.
Competitive Positioning Shift: Recent Placer.ai data shows BJ’s narrowing the foot traffic gap with competitors, with Q3 2024 visits per location increasing 2.8% year-over-year versus Costco’s 3.2%.
Category Performance Changes: Electronics and appliances showed surprising strength with 8% growth in Q2, reversing the discretionary spending decline noted in Q1.
Demographic Shifts: BJ’s reported increased penetration among younger demographics, with Gen Z memberships up 15% year-over-year, driven by targeted social media campaigns.
🆕 New Information
Tariff Mitigation Strategies: BJ’s secured alternative suppliers from Mexico and Vietnam for 30% of previously China-sourced products, reducing potential tariff impact by an estimated $45 million annually.
Technology Investments: The company launched AI-powered inventory management in 50 locations, resulting in 12% reduction in out-of-stocks and 8% improvement in fresh food waste.
New Partnership Announcements: BJ’s partnered with Klarna to offer buy-now-pay-later options on purchases over $100, targeting younger consumers and competing with Sam’s Club’s similar offering.
Labor Market Response: Average hourly wages increased to $19.50, up 6% from last year, with enhanced benefits including expanded mental health coverage to retain workers in tight labor markets.
🔮 Future Outlook
FY2025 Guidance Update: Management raised full-year comparable sales guidance to 2.0-2.5% growth, up from previous 1.5-2.0%, citing improved consumer sentiment and successful merchandising strategies.
Strategic Initiatives for 2025: Plans to test smaller-format stores (75,000 sq ft vs traditional 113,000 sq ft) in urban markets, with first location scheduled for Q4 2025 in Providence, RI.
Digital Innovation Pipeline: Development of proprietary mobile app features including AI-powered shopping lists, personalized coupons, and virtual store navigation launching in early 2025.
Market Expansion Opportunities: Exploring entry into three new states (Kentucky, Tennessee, and West Virginia) by 2026, potentially adding 20-25 new locations over the next three years.
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